HUL Q2 Results: Profit Rises Nearly 8%, Volumes Up As Demand Improves
Sachets of HUL’s Surf detergent are displayed at a store. (Photographer: Prashanth Vishwanathan/Bloomberg)

HUL Q2 Results: Profit Rises Nearly 8%, Volumes Up As Demand Improves

Hindustan Unilever Ltd.’s quarterly profit and sales rose as demand improved after the nation eased lockdown curbs.

Also read: Bulk Of HUL’s Portfolio Is Growing As Economy Reopens

Consolidated net profit of India’s largest consumer goods maker rose 8% year-on-year to Rs 1,967 crore in the three months ended September, according to an exchange filing. That compares with the Rs 2,039.9-crore consensus estimate of analysts tracked by Bloomberg. The bottom line was also aided by HUL’s acquisition of Horlicks in April.

Volumes rose 1% in the reported period, excluding the consumer businesses acquired from GlaxoSmithKline Plc and VWash. The comparable volume had contracted in the previous two quarters.

  • Consolidated revenue rose 15.6% over a year earlier to Rs 11,683 crore—compared with the estimated Rs 11,154 crore.
  • Operating profit rose 16.6% to Rs 2,925 crore.
  • Margin expanded to 25.1% from 24.8% a year ago.

The company has also declared an interim dividend of Rs 14 per share for 2020-21.

HUL results were in line with estimates, but the management commentary suggests that while operations are back to pre-pandemic levels, consumption in the Indian economy is taking longer than expected to recover.

“In the context of a challenging economic environment, our growth has been competitive and profitable,” Sanjiv Mehta, chairman and managing director at HUL, said in a post-earnings call. “Rural markets have been resilient but demand in urban markets, especially metros has been muted.”

“The worst is behind us and we are cautiously optimistic on demand recovery,” he said.

India’s consumer goods makers were battling the worst slowdown in more than a decade before the pandemic struck. Despite being classified as essential services, FMCG companies faced supply chain and labour issues as the lockdown forced workers to migrate back to hinterlands. Sales picked up after stay-at-home restrictions were eased, but a complete recovery is still some time away.

HUL's peer Britannia Industries Ltd., which reported a rise in profit and revenue in the quarter ended September, too, said that while the government has ended the lockdown, it will take a while for the situation to normalise. This corroborates with BloombergQuint’s conversation with distributors who said pent-up demand is tapering off, prompting companies to offer retailers higher margins to drive volumes.

HUL shares fell 0.17% to Rs 2,174.20 apiece on the National Stock Exchange after the quarterly results were announced even as the benchmark Nfity 50 ended the day 0.20% higher at 11,896.80 points.

(Corrects an earlier version that misstated some numbers.)

Watch | HUL Management On Q2 Results Highlights

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